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Over the past two years, as Nigeria grapples with the economic challenges arising from the global recession of 2018 and the covid-19 pandemic, Nigeria’s fiscal and monetary regulators have sought to deploy a number of economic and regulatory tools or interventions with the objective of stabilising the economy, facilitating and improving access of the real sector of the Nigerian economy to credit and job creation. The Central Bank of Nigeria has been a major driver of this, reform and activities and some of the examples of the actions taken include interventions in the domestic gas and healthcare sectors.

In August 2020, the Central Bank of Nigeria (CBN), whose mandates includes the performance of major developmental functions that are focused on the key sectors of the Nigerian economy (i.e., financial, agricultural and industrial sectors) released the Framework for the Implementation of Intervention Facility for the National Gas Expansion Programme (the Programme). The total size of the Programme facility made available by the CBN is 250 billion naira, and facilities disbursed pursuant to the Programme are to be repaid by 31 December 2030.

The CBN also introduced a 100 billion naira credit support intervention for the healthcare industry to provide credit to Nigerian pharmaceutical companies and other healthcare value chain players that intend to build or expand their capacity. The Federal Ministry of Finance has also provided 102.5 billion naira in resources for direct interventions in the country’s healthcare sector in addition to waiving import duty and value added tax on critical medical equipment and supplies.

The CBN further introduced the 50 billion naira Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the pandemic. Eligible activities under the scheme include agricultural value chain activities, hospitality (accommodation and food services), manufacturing/value addition among others. Furthermore, the CBN granted an extension of moratorium by one year on all principal repayments on all CBN intervention facilities effective on 1 March 2020. The CBN also directed that interest rates applicable on all CBN intervention facilities be reduced from 9 per cent to 5 per cent per annum for one year, effective on 1 March 2020.

The CBN continues to maintain the existing intervention facilities to facilitate quick economy recovery across the industries that drive the economy. Also, there is a steady increase in the number of companies leveraging the access to some of these developmental intervention facilities provided by the CBN. In particular, the differentiated cash reserves requirement facility (DCRR), which is a special facility regulated by the CBN and provided from the cash reserves held with the CBN on behalf of financial institutions, has been utilised by key players in the industrial space to finance at a single interest rate the development of a variety of projects. The DCRR was utilized for a gas-fired power plant to provide reliable and sustainable power to an industrial manufacturing company and for the development and construction of an iron ore mining project.

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Originally published in the 7th edition of The Lending and Secured Review.